Determinants of knowledge transfer strategy in franchising: integrating knowledge-based and relational governance perspectives

Abstract

This study presents an integrative model on the franchisor's choice of knowledge transfer strategy by deriving hypotheses from the knowledge-based theory and the relational governance view. First, based on the knowledge-based view, tacitness of system-specific knowledge influences the choice of the knowledge transfer strategy of the franchisor. The higher the degree of tacitness of knowledge, the more knowledge-transfer mechanisms with a high degree of information richness (HIR) are used, such as training, seminars, visits and formal meetings, and the more likely the franchisor chooses a personalization strategy (P-S). Conversely, the lower the degree of tacitness of system-specific knowledge, the more knowledge transfer mechanisms with a low degree of information richness (LIR) are used, such as reports, emails, intranet, databases, and the more likely the franchisor chooses a codification strategy. Second, based on the relational view of governance, trust influences the choice of knowledge transfer strategy of the franchisor. If trust reduces relational risk, more trust reduces the franchisor's use of HIR-knowledge transfer mechanisms and increases the franchisor's use of LIR-knowledge transfer mechanisms. If trust increases knowledge-sharing between the network partners, it increases the franchisor's use of both HIR-and LIR-knowledge-transfer mechanisms. The hypotheses are tested by using data on the use of the P-S in the Austrian franchise sector. The data provide some support for the hypotheses. A new model on the franchisor's choice of knowledge transfer strategy, using knowledge-based theory and relational view of governance is developed, and specifically, the knowledgebased view of Windsperger and Gorovaia [(2011). Knowledge attributes and the choice of knowledge-transfer mechanisms in networks: The case of franchising. Journal of Management and Governance, 15(4), 617-640] is extended by considering trust as additional explanatory variable of the knowledge-transfer strategy.

Determinants of a successful cross-border knowledge transfer in franchise networks

“…Knowledge is considered to be an important resource for franchisors, as franchisors develop competitive advantage on the basis of a unique business concept (Gorovaia and Windsperger, 2013;Lindblom and Tikkanen, 2010;Paswan and Wittmann, 2009;Wu, 2015). For example, Paswan and Wittmann (2009) have noted that a franchisee's success depends on their ability to leverage the knowledge of their franchisors.…”

“…In order to transfer this type of knowledge, organizations have to use informal/personalized high information richness transfer mechanisms, i.e. project committees, meetings, training and staff transfer (Chen et al, 2014;Gorovaia and Windsperger, 2013;Windsperger and Gorovaia, 2011;Wu, 2015).…”

“…The intermediary's role becomes even more important around the issues of standardization and the adaptation of international marketing programs in the cross-border franchising arrangements. So far there has been hardly any research that has investigated the role of the knowledge transfer intermediary in the context of the cross-border knowledge transfer under franchising arrangements (Gorovaia and Windsperger, 2013). Scholars have suggested that the knowledge intermediary should play two key roles, which are knowledge search and knowledge transfer, and that they should have a strong network connectivity with the external sources (Allen, 1977;Allen and Cohen, 1969;Gittelman and Kogut, 2003;Tushman and Katz, 1980).…”

“…Many SMNCs are entering into the international markets through franchise arrangements, and the subject of the knowledge transfer through the franchisor to their international franchisees has become an important empirical question to researchers (Gorovaia and Windsperger, 2013). Recently, it has been shown that emerging economies have become one of the most important destinations for franchising, as the middle class now represent one of the important segments in these markets.…”

“…Above all, less attention has been paid to both the franchisor-related and franchisee-related factors that affect knowledge transfer in cross-border franchise networks, where the asymmetry of the information between a franchisor and a franchisee is pervasive, especially in developing and emerging economies (Doherty, 2009;Gorovaia and Windsperger, 2013;Paswan and Wittmann, 2009). …”